Punjab National Bank (PNB) has set itself a clear efficiency goal for the next two and a half years. The state-owned lender wants to bring its cost-to-income ratio below 50% in the current financial year and lower it further to around 45% by FY2028-29, according to its Managing Director and CEO Ashok Chandra.
In an interview with PTI, Chandra said the bank’s cost-to-income ratio had already eased to 50.38% in the first half of FY27, compared with 53.3% in September 2025. “We are aiming to go below 50 per cent this financial year. That is the first target we have set for ourselves. In the next two years, by 2028-29, we should be somewhere around 45 per cent,” he said.
Two levers: leaner costs, stronger earnings
The plan rests on two tracks: rationalising expenses and maximising profitability. Chandra said every review meeting at the bank now focuses on the cost of deposits, the yield on advances, fee-based income and ways to cut operating expenses, and that business units are being sensitised to the importance of operational efficiency. He added that the bank still sees room to reduce costs in several areas.
Acknowledging that legacy challenges had kept PNB’s ratio relatively high for years, the PNB chief said the bank is now making a concerted push to bring it in line with better-run peers.
Record Q2 profit despite treasury hit
The efficiency drive comes on the back of a strong September quarter. PNB reported a 13% rise in net profit to Rs 5,532 crore in Q2 FY27, its highest-ever quarterly profit, helped by better core income and fewer bad loans.
That came despite a sharp fall in treasury income, which dropped to Rs 753 crore from Rs 1,769 crore a year earlier, a hit of roughly Rs 1,000 crore. Chandra pointed to core operating profit, which strips out treasury gains and recoveries, as the better gauge of the bank’s underlying strength. Core operating profit grew about 29% year-on-year in Q2, following 32-34% growth in the previous quarter.
Eyeing the Rs 6,000 crore club
Asked when PNB could join the club of banks posting a Rs 6,000 crore quarterly bottom line, Chandra said the bank had kept operating profit, net profit and other key metrics consistent over the past four quarters and expects the trend to continue. “Just wait for a few quarters,” he said.
Why it matters
For public sector banks, the cost-to-income ratio has become a key differentiator as margins come under pressure and competition for deposits intensifies. A sub-50% ratio would put India’s second-largest lender on a more competitive footing, while the 45% goal for FY29 signals a multi-year commitment to productivity, digitisation and tighter cost discipline rather than a one-quarter improvement.
